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The US leader's comments marked a change in tone after his sometimes anti-Islamic rhetoric during the presidential race.
Trump urges Muslim leaders to 'drive out' terror
Donald Trump has likened the fight against Islamic extremism to a battle between "good and evil" and not different faiths.
Speaking to leaders from around 50 Muslim-majority countries in Saudi Arabia, the President attacked militants as "barbaric criminals who seek to obliterate human life".
The US leader urge the nations to "confront Islamic terror of all kinds", deny sanctuary to extremists and stand together against the murder of innocent Muslims by groups like Islamic State.
According to Mr Trump, "95% of the victims of terrorist attacks are themselves Muslims".
He said America was seeking a "coalition of nations" in the Middle East with the aim of "stamping out extremism".
Trump in Saudi: 'Tremendous progress tackling IS'
He said the countries "cannot wait for American power to crush this enemy for them".
Striking a conciliatory line, his comments marked a change in tone for Mr Trump after his remarks during the presidential campaign where he told the US: "Islam hates us."
Addressing the Arab-Islamic American Summit in Riyadh, he said: "We now face a humanitarian and security disaster in this region that is spreading."
Saudi King: 'Islam is the religion of peace'
Mr Trump told leaders at the meeting that he brought "a message of friendship and hope and love", and urged Muslim countries to ensure "terrorists find no sanctuary on their soil".
He announced a deal with Gulf countries to crackdown on the funding of extremists.
The President also hit out at Iran, accusing Tehran of "fuelling the fires of sectarian conflict".
He said among Iran's destabilising interventions was in Syria, where President Bashar al Assad has "committed unspeakable crimes".
"From Lebanon to Iraq to Yemen, Iran funds, arms and trains terrorists, militias and other extremist groups that spread destruction and chaos across the region," Mr Trump said.
Sky's Foreign Affairs Editor Sam Kiley said the President's comments "will be very much welcomed by the predominantly Sunni attendees from some 50 nations.
"And it will strike a degree of horror into (Shia-dominated) Iran.
"Terrorism is sponsored through groups like Hizbollah, by Iran, but there are also Sunni Islamic terrorist groups that the Iranians are fighting, not least Islamic State in Syria."
Mr Trump also called upon countries around the world to work together to end the humanitarian crisis in Syria.